The Hindu Business Line : Smaller banks unaffected by free ATM usage

Coimbatore, Aug. 21 Smaller banks have remained unaffected by free ATM usage, despite a smaller network. Following an RBI directive, all bank customers are able to transact on ATMs of any other bank (in which he/she may not be an accountholder) for free from April 1.

Bankers said, “Initially, customers were drawn to ATMs of other banks, merely to check their balance, which is a non-cash transaction. Although such enquiries still continue, the non-cash transaction volumes are not significant any more.”

It was also initially perceived that banks would aggressively strengthen their ATM network. That has not happened even though they no longer have to wait for permission from the banking regulator for expanding their ATM network.

Officials of City Union Bank, which has 125 ATMs, said they noticed a 25-30 per cent jump in the usage of their ATM by clients of other banks. “Our customers have also been drawing cash from the ATMs of other banks. But the net payments are tilted in our favour,” a bank spokesperson said.

More hits

Karur Vysya Bank which has 336 ATMs has recorded a daily hit rate of 1.15 lakh across all its ATMs. “Around 40 per cent of these are by customers from some other bank. We have initiated measures to identify pockets where our customers are using other bank ATMs more frequently and are in the process of installing our own cash dispensers,” a KVB official said.

Not easy task

While admitting that banks with a large ATM network are at an advantage, the Chief Executive Officer and Managing Director of Federal Bank, Mr Venugopalan, said “putting cash and maintaining these machines is also not easy. While technology drives business, it is not without cost,” he added. With a network of 690 ATMs of which over 300 are located in its home State — Kerala, the bank, Mr Venugopalan said ‘is in an advantageous position at present. From a daily hit rate of 90,000 (in Kerala), we have reached 1.30 lakh hits a day at present. We are present in other States, but do not have that many accounts either.’

For Lakshmi Vilas Bank, with 110 ATMs, the position seems comfortable at present. ‘We are making a decent income from ATM transactions. The hit rates have gone up tremendously. In one month, we earned about Rs 90,000 from one ATM alone,’ an official said and pointed out that the long queues in the ATMs of bigger banks forced customers to use LVB ATM. ‘Location matters, adds value,’ the official said.

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